COA: P17B public works deals shady

MANILA, Philippines–The Commission on Audit (COA) has found a host of “red flags,” like excessive costs and unauthorized signatories, in the contracts of public works projects worth P16.9 billion that 12 contractors cornered in 2009 and 2010.

COA Chair Ma. Gracia Pulido-Tan on Tuesday said the agency had so far issued notices of disallowance for projects worth P184.66 million, of which only P17.8 million had been refunded.

Tan said the irregularities that a special audit found would be subject to a more intensive fraud audit.

The special audit was conducted upon the request of Secretary Rogelio Singson of the Department of Public Works and Highways (DPWH).

“Because of the many red flags we have found, we are subjecting this to a more thorough and intensive fraud audit this time,” Tan told the House committee on good government, where she appeared in connection with an inquiry into the use of funds of the DPWH during the Arroyo administration.

Tan said that she hoped to finish the fraud audit by the end of the year and that she would forward the findings to the Office of the Ombudsman.

The COA investigated P16.9 billion worth of projects awarded in 2009 and 2010 to contractors identified by Singson, according to Tan.

List of contractors

Singson identified the contractors as Antonio V. Nidea Construction; Sunwest Construction and Development; DSB Construction/N Four General Contractors; Hi-Tone; Three W Builders; RAM Builders; I and E Construction; Algimar Construction; Ferdstar Builders; Ritz Commercial; E. Gardiola Construction; and LMG Construction.

The biggest amount of disallowance was for projects implemented in Davao region, totaling P121.18 million.

Other disallowed projects were those in Central Luzon worth P29.281 million; Calabarzon, P14.93 million; and Central Visayas, P19.27 million.

Excessive costs

Among the COA’s general findings were excessive contract costs; excessive material costs and quantities of materials procured, some of which were not used; implementation of projects without a funding order; and improper procurement and bidding processes, such as the release of bidding documents even before the contractors had paid for these.

Tan provided details in her presentation before the House panel.

 

C5 Extension defects

For instance, a C5 Extension project worth P578.527 million was started by Readycon Trading/Gardiola without funding cover, notice of award and contract. Eventually, P200 million was released from the DPWH’s lump sum appropriation in 2009.

Tan also said defects were found in C5 projects and these were not corrected even if 98 percent of the contract price had been paid.

The defects included cracks on the concrete sidewalk, curb and gutter; collapsed sidewalks; presence of potholes and poke marks on the concrete pavement; and settlement of the gutter and concrete curb.

In Isabela province, notices of award for P24 million worth of projects were issued to Ritz Commercial five days before the receipt of the special allotment release order (Saro).

In Pampanga province, a spillway project was funded from DPWH savings but did not have the appropriate realignment authority.

Saro irregularities

In Eastern Visayas, P1.8 billion worth of Saros for 96 projects had appropriation codes not identifiable in the budget law, which was why auditors could not establish if these were duly appropriated projects.

The COA team also found excessive contract costs, with variances above the tolerable limit of 10 percent.

For instance, unit prices of projects in Pangasinan province were higher by 62 percent compared with those in other districts.

Too many materials were also bought for certain projects. For instance, a traffic warning sign attached to a post in the Infanta-Dinahican Road was found excessive, costing P6.46 million.

No procurement planning

There were also a “substantial” number of unused metal guardrails and road signs.

Tan said the audit team also found deficiencies in the procurement process.

In the Ilocos, Cagayan Valley, Central Luzon and Bicol regions, 290 projects worth P6.37 billion did not undergo procurement planning in violation of the law. These were not included in the regular infrastructure program and procurement plans were made after the receipt of the Saro.

There was also no genuine and meticulous post-qualification assessment for several projects, which resulted in multiple contracts exceeding net financing and constructing capacities, assigning the same set of equipment to multiple, simultaneous projects, and delayed, substandard or poorly implemented projects.

Tan herself wondered how a contractor who pledged one dump truck and one payloader for simultaneous projects was able to complete the job.

Bidding deficiencies

Another red flag was the contractors’ being able to submit bids for the projects before paying for the bid documents, when no bid documents should have been released before payment. Delays in payments ranged from one day to 163 days.

Several contract or bidding deficiencies were found, such as the absence of representatives from the private sector, the COA or nongovernment organizations in the bidding process; absence of a bids and awards committee (BAC) resolution declaring the lowest calculated bid; and absence of proof that losing bidders were notified.

Unauthorized signatories

There were also unauthorized signatories to contracts, with P843 billion worth of projects signed by the BAC chair when Tan said this was a big violation because of conflict of interest.

As for the implementation and performance, Tan said there had been no strict monitoring of the projects during implementation and no inspection was conducted after the project was completed.

Originally posted at 12:24 am | Tuesday, June 10, 2014

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TAGS: Contractors, Philippines, Public Works